There are more than forty free zones and they differ on activity lists, visa packages, office requirements, audit rules and cost. The zone is chosen **after** the jurisdiction decision, and the two questions that decide it are: does the zone licence what you actually do, and does the package carry the visas you need.
Free Zone Company Formation
Selecting a zone and incorporating
There are more than forty free zones and they differ on activity lists, visa packages, office requirements, audit rules and cost. The zone is chosen after the jurisdiction decision, and the two questions that decide it are: does the zone licence what you actually do, and does the package carry the visas you need.
| Item | Detail |
|---|---|
| Proposed name | [NAME] — FZ-LLC, FZE or FZCO |
| Free zone | [NAME] |
| Emirate | [EMIRATE] |
| Legal form | [FZE — single shareholder / FZCO or FZ-LLC — multiple / Branch] |
| Licensed activities | [LIST] |
| Licence type | [Commercial / Service / Industrial / Trading / Freelance] |
| Shareholders | [NAMES AND PERCENTAGES] |
| Share capital | AED [AMOUNT] |
| Facility | [Flexi-desk / Office / Warehouse] — visa quota linked |
| Visa quota | [NUMBER] |
| Designated zone for VAT? | [Y/N] — a different question from corporate tax |
| Licence issued | [DATE] Number: [NUMBER] |
1. Choosing the Zone
| # | Question | Why it decides | Answer |
|---|---|---|---|
| 1 | Does the zone licence our exact activity? | Activity lists differ; a zone that does not licence it is not an option | [DETAIL] |
| 2 | How many visas do we need in year one and year three? | Quota is linked to the facility taken | [NUMBER] |
| 3 | Do we need physical space, warehousing or just a desk? | Drives cost and quota | [DETAIL] |
| 4 | Is the zone a designated zone for VAT? | Affects VAT treatment of goods, not services | [Y/N] |
| 5 | Does the zone require audited accounts? | Some do; a QFZP claim requires them regardless | [Y/N] |
| 6 | What is the renewal cost, not the first-year offer? | Introductory pricing is common | [AMOUNT] |
| 7 | Which banks work readily with this zone? | Account opening difficulty varies by zone | [DETAIL] |
| 8 | Is the zone recognised by our customers and counterparties? | Some zones carry more credibility with banks and clients | [DETAIL] |
| 9 | Does the federal labour law apply in full here? | Varies by zone — affects the employment documents | [DETAIL] |
| 10 | Can we redomicile out later if we need to? | Now possible between mainland and free zones | [DETAIL] |
2. Legal Forms
4 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
The mainland-versus-free-zone decision comes first and turns on where revenue is generated. Only then does zone selection matter. Companies that pick a zone on price and discover it does not licence their activity, or cannot support their headcount, have to start again.
Zones licence different activities, and some are specialised by sector. Confirm in writing that the zone licences your exact activity before paying anything. A close-enough activity code produces visa refusals and regulator problems later.
A flexi-desk carries a small quota. Growing past it means taking more space mid-term, often at a worse price than negotiating it at the outset. Model headcount for three years, not one.
The 0% corporate tax rate is conditional on Qualifying Free Zone Person status — substance in the zone, qualifying income, transfer pricing compliance, no election out, and audited financial statements. A free zone entity failing any condition pays 9% on all income.
Serving mainland clients directly is restricted, and the income is non-qualifying for corporate tax. With a de minimis of the lower of AED 5,000,000 or 5% of revenue, a modest amount of mainland work can cost the 0% rate for five tax periods. Decide how mainland business will be handled before the first such invoice.
Designation affects the VAT treatment of goods in defined circumstances. Services attract 5% VAT regardless. And the VAT designated zone list has no bearing on the corporate tax qualifying income analysis — two separate regimes, two separate lists.
Most free zones apply Federal Decree-Law 33/2021 with the zone administering it, but the position varies, and DIFC and ADGM have entirely separate employment codes. This determines which employment templates apply, and it is the question nobody asks at licensing.
Introductory pricing is common and renewal is where the real cost sits. Ask for the year-two and year-three figures in writing, including facility, licence, establishment card and per-visa costs.
Some zones are straightforward for corporate account opening and others are treated with caution by banks. Ask which banks actively onboard from the zone before committing, because the account is on the critical path for WPS and therefore for paying anyone.
Corporate shareholder documents from abroad need attestation and legalisation exactly as for a mainland incorporation. This is the usual cause of delay and should start before anything else.
Some zones require audited financial statements as a licensing condition, and a Qualifying Free Zone Person requires them for the corporate tax position under current rules. Budget for an audit even where the zone does not demand one.
The register must be filed with the zone authority and kept current as ownership changes. It is checked in banking and due diligence and is frequently set up once and never updated.
A free zone branch of an existing company is not a separate legal entity — the parent remains liable for everything it does. A separate FZE or FZCO ring-fences liability. Choose deliberately rather than by whichever the zone quotes first.
Recent amendments to the Commercial Companies Law introduced a mechanism to move a company’s registration between authorities, including between free zones and the mainland. It is a process with approvals rather than a switch, but it means the initial choice is no longer permanent.
Reflects UAE law and free zone practice current as of {{DATE OF USE}}. Zone rules, activity lists, packages, audit requirements, designated zone status and corporate tax conditions all change and differ between zones — confirm directly with the zone authority and take tax advice on the QFZP position before relying on the 0% rate.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.